Vodafone 2004 Annual Report Download - page 6

It is my privilege to report, once again, another highly successful year for your
company, with an excellent overall operating performance generating further substantial
growth in profits and cash flows. Your company’s total venture mobile customer base
has increased to over 340 million people. This is a wonderful achievement for a
company that is only 20 years old and provides us with a really strong platform as we
transition into the next phase of our development. It is only with the dedication and
commitment of all members of staff throughout the world that we have achieved such
excellent results to date and on behalf of the Board I thank them all.
For us, the year saw a rapid uptake of Vodafone live!™ across our footprint, following its
successful launch last year, with nearly 7 million controlled customers now enjoying the
richer mobile telecommunications the service delivers. We also started to introduce 3G to
our customers. In February, we launched the Vodafone Mobile Connect 3G/GPRS
datacard, which provides fast, secure access to corporate networks from lap top
computers, across seven European countries and more recently we announced the launch
of consumer services through Vodafone live!™ with 3G in Germany, Portugal, Italy and
Spain. I believe that this technological evolution offers us significant growth opportunities
and Vodafone is very well positioned to take advantage of these opportunities due to its
global footprint and its continued strong financial performance. Although the mobile
telecommunications industry remains extremely competitive, with new entrants driving
new technologies and many existing operators having recovered from the financial
pressures they faced only a short time ago, your company remains the industry leader.
As our international business expands it is essential that, in order to deliver the best
possible experience to our customers and to achieve brand preference, we provide
similar levels of excellence in all of our markets. To this end we have created two new
central functions, Group Marketing and Group Technology & Business Integration.
Group Marketing, led by Peter Bamford, provides leadership and coordination across a
range of marketing and commercial activities including brand, product development,
content management, Partner Networks and global accounts. Group Technology &
Business Integration, headed by Thomas Geitner, leads the implementation of a
standardised architecture for business process, information technology and network
systems, which will support the next generation of products and services and the
critical role of introducing and operating 3G capacity.
During the year, we continued our policy of increasing our shareholdings in existing
operations, moving to 100% in Vodafone Malta and over 99% in Vodafone Greece. In the
UK, we acquired prominent service providers, Singlepoint (4U) Limited and Project Telecom
plc, increasing our direct access to our UK contract customer base to over 90%. We also
disposed of interests in mobile businesses in India and Mexico, as well as our fixed line
operations in Japan. In addition, we extended our Partner Networks to a total of 13
countries through new agreements with operators in Bahrain, Cyprus, Iceland, Lithuania,
Luxembourg and Singapore. We expect to add further countries in the coming year.
In February of this year, we entered into a high profile auction process for the
acquisition of AT&T Wireless in the US. One of the many responsibilities that your
Board has is its duty to shareholders to explore opportunities where it believes
enhanced shareholder value may be achieved. Your Board considered that acquiring
AT&T Wireless at the right price would have enhanced the Group’s position in the US
and delivered, over time, better returns for shareholders.
In entering the auction process your Board determined a price ceiling which, had it
been exceeded, would not have provided the returns we considered necessary to
justify such an acquisition. In the event, our ceiling price was exceeded by Cingular
Wireless and we retain our 45% investment in the leading mobile operator in the US,
Verizon Wireless. Our relationship with Verizon Communications, our partner in Verizon
Wireless, remains strong. They supported our participation in the auction and we look
forward to continuing to work with them to further strengthen Verizon Wireless.
Corporate governance continues to be at the forefront of your Board’s considerations.
During the year we have fully complied with the Combined Code relating to corporate
governance, as appended to the Listing Rules of the UK Listing Authority. In addition,
we also have to comply with US securities laws. The Sarbanes-Oxley Act of 2002 has
introduced a number of changes to corporate governance requirements with which we
have complied this year and with which we will comply as new requirements are
introduced over the coming years. More details of the corporate governance work of
your Board are provided later in this Annual Report.
On 1 September 2003, Luc Vandevelde joined the Board as a non-executive director.
He brings with him many years of experience gained in retailing and consumer goods
and his financial, management and marketing skills in international business will be of
great value to the Board. I would also like to congratulate my colleague Alec Broers
who was advised on 1 May 2004 that Her Majesty the Queen intends to make him a
Life Peer for his contribution to engineering and higher education.
Vodafone is a vibrant company, dedicated to the creation of shareholder value. This
value is achieved through the enhancement of products and services such as Vodafone
live!™, the advance in technology – 3G – and the investment in assets where positive
returns may be clearly identified. A progressive dividend policy and our share buy back
programme are means by which value is returned to shareholders. In light of the
excellent results and the confidence with which it views the future, the Board is
recommending the payment of a final dividend per share of 1.0780 pence which,
together with the interim dividend already paid, makes a total dividend for the year of
2.0315 pence, an increase of 20%. We will also seek your approval to extend the share
buy back programme we announced in November, with £3 billion of purchases planned
for next year, following the £1.1 billion purchased up to March 2004.
As a global business, we are mindful of our responsibilities to all stakeholders around the
world and in particular that the delivery of our services should have as little impact on the
environment as possible. As part of this endeavour, I would encourage shareholders to
receive communications from us electronically. In doing so, documents are provided more
quickly, communications are less costly and importantly it is more environmentally friendly.
As we transition to a new era in mobile telecommunications, I am confident that
through our focus on our strategic goals we are well positioned to make further
significant progress in the year ahead.
Lord MacLaurin of Knebworth, DL
Chairman
Vodafone Group Plc Annual Report 2004
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Chairman’s Statement